An Exploration of Iso 9001 Adoption in the Supply Chain

Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM

AN EXPLORATION OF ISO 9001 ADOPTION IN THE SUPPLY CHAIN

Scott Dellana ([email protected]) John Kros ([email protected]) Jonathan Nissao ([email protected]) Department of Marketing and Supply Chain Management, College of Business, East Carolina University Greenville, NC 252-328-4893

ABSTRACT

There are numerous methods firms use to evaluate quality within and across their supply chains. Certifications, quality awards, and industry benchmarking all are considered good methods for evaluating supply chain quality. However, studies in supply chain quality are few, limited, and with mixed results warranting more extensive study. Some research has investigated the question from the Total Quality Management perspective or studied only those firms that have been recipients of a quality award such as the Malcolm Baldrige award. This research focuses on the impact ISO 9000 certification has had on supply chain quality in the United States of America (USA). We extend the examination of quality management practice in the supply chain by studying a large number of industry classes and supply chain organizational positions and assess for differences in quality maturity across these classes and positions. The research finds that ISO 9001certification is not uniformly distributed by firm size, industry class, or supply chain position. Further, there does not appear to be a strong relationship between quality maturity and ISO 9001 certification, either within the firm or in relation to supplier selection. However, ISO 9001 certified firms favor supplier firms that are also ISO 9001 capable.

Keywords: Supply chain quality, ISO 9000, quality control systems

INTRODUCTION

The question of whether or not quality management practices disseminate across supply chains has been posited in the past (Corbett, 2006). This research addresses that question from the aspect of the ISO 9000 series of quality management certifications. The integration of quality management systems, such as ISO 9000, across the supply chains has become more common in the manufacture and delivery of products in the global marketplace (Flynn and Flynn, 2005). With that said, there are many recent notable examples of break-downs in global supply chain quality. One of the most notable is the Toyota recall for defective accelerator mechanisms, which was the culmination of a series of product recalls (Cole, 2011). The problem was traced to outsourcing of component production to native suppliers in countries outside Japan (Ohnsman et al., 2010). Global supply chain pressure may be the culprit in the breakdown of quality management practices in this case. (Cole, 2011; Piotrowski and Guyette, 2010). Kang (2010) investigated Japanese auto companies and the correlation between rising recalls from poor quality and movement of manufacturing overseas. Such studies suggest that quality problems

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM increase as supply chains stretch globally (Tang, 2008; Kang, 2010). underscoring the need for active management of quality in the supply chain. According to Foster (2011). …some of the greatest quality problems encountered in the 21st century arise from the dysfunction of global supply chains. High profile cases in organizations such as Dell, Boeing, or Mattel have cut across many industries, global markets, and supply chains. (Grinnell, 2010; Roloff and Ablander, 2010; Ostrower et al., 2013). Quality fade is a real concern as supply chains stretch globally, seeking to decrease costs and increase profits (Whipple and Roh, 2010; Enderwick, 2009).

However, the literature gives many examples of companies that have achieved great success through a quality management philosophy and effective supply chain management practice. Many of these examples of customer-driven supply chain excellence are household names, such as Apple, 3M, IBM, Best Buy, Samsung, IKEA and many more (Mehrejerdi, 2009; Kopczak and Johnson, 2003; Lockamy et al., 2000). Thus, there appears to be a gap between what is often reported in the literature as generally successful customer-focused supply chain integration and the rash of recently reported breakdowns in supply chain quality. Therefore, this research seeks to address the gap between quality practice and perception regarding ISO 9000 certification in order to gain a better general understanding of the principles, practices and program maturity of quality management across industries and within supply chains.

Literature Review

Supply chain quality may be viewed from a variety of perspectives, including but not limited to a total quality management philosophy, quality award criteria (such as the Baldrige). or ISO 9000 certification (Carmignani, 2009; Cua et al., 2001; Lee, et al., 2011; Lin et al., 2005; Terziovski and Hermel, 2011; Vecchi and Brennan, 2011; Zu and Kaynak, 2012). However, the ISO series of quality management systems is widely diffused throughout the world. It would be expected that these principles would also be diffused across global supply chains. Corbett (2006) and Franceschini, F. et al. (2006) both discuss evidence that in general ISO 9000 quality management principles have diffused across global supply chains. He concludes that part of the global diffusion of ISO 9000 did move upstream within the supply chain. Pan (2005) also conducted a comparative analysis of international firms on ISO 9000 certification and its integration within their supply networks. Although insightful the study by Lee, P.K.C. et al., (2009) investigated how ISO 9000 certified organizations can implement the standard in different ways, it was limited to firms in the Macau. While all of these studies provided insight they were very broad and tended to oversample European and Asian firms. Oversampling these two geographic areas is problematic in that firms in Europe initially adopted ISO 9000 because the standard was developed and initiated there and firms in Asia adopted so they could sell into European markets. The diffusion of ISO 9000 in the United States has taken a different path. Since the path towards certification has been different in the United States the same conclusion cannot be reached and a gap in the research exists regarding how pervasive ISO 9000 quality management practices are in United States firms and their associated supply chains. This research specifically addresses this area.

A more extensive study of ISO 9000 quality management practices across different industries and supply chain positions within the United States is warranted. In addition, a more thorough

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM understanding of perceptions and implementation of ISO quality management principles across the supply chain is needed. To this end, the answers to the following research questions were sought in this study:

1. How pervasive and equally distributed is ISO 9001 by company size/purchasing spend? 2. How pervasive and equally distributed is ISO 9001 quality certification by industry? 3. How pervasive and equally distributed is ISO 9001 by supply chain position? 4. To what extent is organizational quality maturity related to ISO 9001 certification? 5. To what extent do companies with ISO 9001 certification choose suppliers with relatively greater quality maturity? 6. To what extent do companies with ISO 9001 certification choose suppliers that are capable of ISO 9001 certification?

DATA AND METHODOLOGY

Data for this study came from a national e-mail survey of professionals of the Institute for Supply Management (ISM) and the Council for Supply Chain Management Professionals (CSCMP). ISM’s membership contains more purchasing/procurement type professionals while CSCMP’s membership contains more logistics and transportation type professionals. Membership in these organizations cuts across many industries involving manufacturing and services and even includes government, education, merchandising and retail. As such, a wide cross section of supply chain professionals was represented. Each of these organizations makes the email addresses of board members and organization constituents addresses available online, which gave a total of 4830 available e-mail addresses for this study.

The order of those emails was randomized and a pilot sample of 100 emails was sent. Twenty- seven supply chain managers participated in this preliminary pilot study and were not included in the final sample. Based on the responses to this pilot survey, some minor adjustments were made to the survey questionnaire to arrive at its final form.

To answer the research questions related to ISO 9001 we used logistic regression (LR) analyses of data because the dependent variable of ISO 9001 certification is binary (yes/no). ISO 9001 adoption scores are coded in LR as zero for No and 1 for Yes using SPSS statistical software. With the variable coded this way and an average taken, there is a direct estimate of the probability of obtaining a 1 in the sample. Observed data is used to model the probability of the adoption of ISO 9001 in relation to the independent variable(s). Every observed ISO 9001 adoption has an observed probability of 1 (100%). If there is no ISO 9001 adoption, then the observed probability is 0 (0%). Predicted probabilities are then fitted to a logistic distribution (an S-shaped curve). These probabilities are usually expressed as odds. To compare the odds of ISO 9001 adoption among different groups, odds ratios are used. A Wald test is then used to test the statistical significance of each coefficient in the model. For further details on the LR theory see Agresti (2002). Another tool of LR is the Receiver Operating Characteristic (ROC) curve. It is a graphical plot of the sensitivity (true positives versus false positives) for a binary classifier system as its discrimination threshold is varied (Swets 1996). The ROC is also used to generate a summary statistic called the AUC (Area Under Curve). When the AUC is larger than 50%, the

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM model has better predictive capability than random chance. For details on AUC theory see Fawcett (2006). The ROC and AUC analyses are beyond the scope of the current report.

Research question 1 examines the relationship between ISO 9001 adoption and firm size, as measured by procurement spend, number of employees in the firm, and the number of employees in the purchasing group. Participants were first asked to report whether or not they are ISO 9001 certified (i.e., Yes or No) and then asked to identify their organization’s size for each variable from a list of several categories each.

In order to assess research question 2 on ISO 9001 adoption and Industry class, participants were asked to identify their organization’s industry Class based on the SIC code system. There originally were seventeen classes, but these had to be reduced to a much smaller number in this research due to small cell sizes.

Research question 4 seeks to determine how ISO 9001 adoption might be related to the level of organizational quality management practice. The ISO 9001 information was used along with an Organizational Quality System (OQS) score to answer the research question. The OQS measure, which assesses the quality maturity of the firm, is an aggregate of responses to a group of thirteen statements (ref. Table 2) which were gleaned from several sources (Millen and Maggard, 1997; Choi and Rungtusanatham, 1999; Dellana and Hauser, 2000; Rothlein et al., 2002; Rahman, 2006; Theodorakioglou et al., 2006). The statements cover as efficiently as possible and with sufficient detail the main quality issues in a generic organization that could be found at any point in the supply chain and in any industry type. The thirteen statements, rated on a 1 to 7 point scale (with 1 = Disagree and 7 =Agree). were summed as appropriate to develop the OQS score in each case. Research question 5 examines the relationship between ISO 9001 adoption and its relationship to supplier quality maturity. The participant was asked to identify the organization’s top three suppliers by these suppliers’ industry classes (modeled after the SIC code system) and to rank them by the value of inventory carried within the organization. For the supplier ranked number one, a statement then follows that asks the respondent to report his or her degree of agreement (on a 1 to 7 point scale, with 1 = Disagree) with each of the following five statements on quality:

1. This supplier is currently capable of achieving ISO 9001 or equivalent certification. 2. During the last six months, our organization has had no significant complaints against this supplier. 3. This supplier follows Six Sigma principles for addressing variation in process/product. 4. This supplier practices Total Quality Management. 5. This supplier is currently capable of winning a State, National or International quality award.

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The respondent was then asked to rate the second-ranked and third ranked suppliers on the same five quality statements. The overall Supplier Quality System (SQS) score in each case was developed as the sum of the scores for the five statements. These five statements are conceptually broader than the thirteen statements on organizational quality assessment, because it was determined that the respondent representing the firm in this study was not likely to have detailed knowledge of the firm’s many suppliers’ internal quality systems. We chose to limit our exploration of quality perceptions for the top three suppliers because our pilot study indicated that this would be adequate to represent the majority of inventory value for most of the firms in our full study. The survey included a question that assessed the percentage of the organization’s annual inventory value represented by the three top suppliers. These suppliers were represented by their industry Class, and not their individual identities so as to maintain company/respondent anonymity. Research question 6 examines the relationship between ISO 9001 adoption and the selection of suppliers that are also ISO 9001 capable. The first statement of the SQS metric about supplier ISO 9001 capability was used to test this relationship.

Other aspects that might impact on the relationships studied here were addressed including: respondent years of experience in supply chain management; number of employees in the organization and the procurement department; company annual procurement spend; and respondent gender. Finally, several other questions were asked, including: job title (e.g., CEO, VP, Manager, Staff, etc.). the primary emphasis of their job (i.e., Sourcing, Logistics, or Operations). and membership in professional organizations (i.e., APICS, ASQ, CSCMP, and ISM).

RESEARCH RESULTS

After a pilot study review of the online survey and appropriate revisions, 4730 emails were sent. Recipients returned 565 questionnaires, for a response rate of 19.3% [565 / (4730-1806)]. Non- response bias was assessed by comparison of early to late respondents. There were no significant mean differences between the groups. Table 1 includes a comparison of respondents’ companies by industry type and the target population. The distributions are very similar, thus confirming a representative sample of the member organizations of ISM and CSCMP.

Our starting sample size of 565 responses was reduced to 271 usable responses for this research based on those who answered the ISO 9001 question as either Yes or No. Working from these 271 respondents, we report on various response frequencies in Table 2. Note that, for Supply Chain Position Industry Class, and variables measuring company size, some categories were collapsed in order to obtain group sizes large enough for statistical analysis. From a demographic standpoint, most of the respondents were found to work in Sourcing/Purchasing and have more than 25 years of work experience in the field. Close to 92% stated they were Familiar to Very Familiar with their organization’s internal quality processes. About 40% of the companies that responded Yes or No to the ISO 9001 question are ISO 9001 certified. Most respondents are in the Distribution/Retail position of the supply chain, but about half of ISO 9001 certified firms are in the Assembly Manufacturing position (55 of 106). The largest industry class represented is Manufacturing. About 73% of the firms in this the Manufacturing industry class are ISO 9001

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM certified. Several categories of company size are well-represented. On average, about 70% of suppliers are reported as capable of achieving ISO 9001 certification.

Table 1 Respondent Organization Industry Class Breakdown

Industry Subcategory Total Survey %* **Actual % Manufacturing 113 26.5% 38.3% Pharmaceuticals Manufacturing 13 3.0% 4.1% Public Sector (Government & Utilities) 59 13.8% 12.1% Logistics 81 19.0% 17.2% Food Products 16 3.8% --- Professional & Educational Services 81 19.0% 18.6% Wholesale and Retail Trade 39 9.1% 4.2% Other 25 5.8% 5.5% Totals 427 100.0% 100.00% * Which best describes your firm’s industry? ** Source: http://www.ism.ws/files/membership/MemDemReport2006.pdf and www.cscmp.org/Downloads/Resources/Business04.pdf in a weighted combination

Table 2 Data for Respondents to ISO 9001 Question

Item Frequencies ISO 9001 Certification Yes = 111, No = 160 Sourcing/Purchasing = 133, Logistics/Transp = 57, SCM Area of Work Operations = 52, Other = 29 Less than 3yrs = 3, 3-9 yrs = 26, 9-16 yrs = 47, SCM Years of Experience 16-25 yrs = 87, 25+ yrs = 106, N/A = 2 Familiarity with Quality Program Unfamiliar = 17, Familiar = 241, Neither = 4 Supply Chain Position Basic MFG = 36, Assy MFG = 89, Dist/Retail = 134 Public Sector = 36, MFG = 89, Logis/Dist = 45, Industry Pharma/Food = 23, Prof Serv = 41, Trade = 24 Annual Inventory Value of top 1-20% = 41, 21-40% = 46, 41-60% = 60, More than three Suppliers 60% = 124 Supplier 1 ISO 9001 capable Agree = 178, Disagree = 26, Neutral = 33 Supplier 2 ISO 9001 capable Agree = 166, Disagree = 20, Neutral = 46 Supplier 3 ISO 9001 capable Agree = 146, Disagree = 20, Neutral = 52 Less than $11Mn=62, $11-40Mn = 88, more than Annual Procurement Spend $100Mn = 95 Number of Employees Less than 500 = 125, 501-5K = 61, more than 5K = 85 Number of Purchasing Employees 5 or less = 106, 6-20 = 76, more than 20 = 82

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Research Question 1

Research question 1 examines the relationship between ISO 9001 adoption and firm size, as measured by procurement Spend, number of employees in the firm, and number of employees in the firm’s Purchasing group. Participants were asked to identify their organization’s Spend from a list of five spend categories. Due to some small cell sizes the variable was collapsed into 3 categories of Small (0-$11Mn). Medium ($11Mn-$40Mn). and Large (over $40Mn). Similar category collapsing was necessary for the other two variables that also measure size. The final categories for Number of Employees were 1-500, 501-5000, and over 5000, while the final categories for Number of Purchasing Employees were 1-5, 6-20, and over 20. All three variables were modeled together in relation to ISO 9001 certification. Only the Number of Purchasing Employees was significant as shown in Table 3. Contrasts reveal that when compared to Small companies, Medium and Large size companies are about 3 times more likely to be ISO 9001 certified. In addition, Large size companies are almost twice as likely to be certified as Medium size companies.

Table 3 Results for ISO 9001 Certification versus Company Size

Odds Variable/Contrast Beta Wald Significance ratio Purchasing Employees 18.17 .000 Small vs. Medium Size 1.12 12.19 .000 3.08 Small vs. Large Size 1.22 14.94 .000 3.39 Medium vs. Large Size 0.66 5.82 .016 1.93

Research Question 2

In order to assess research question 2 on ISO 9001 adoption and Industry class, participants were first asked to report whether or not they are ISO 9001 certified (i.e., Yes or No). They were also asked to identify their organization’s industry Class based on the SIC code system (ref. Table 1). For the Industry Classes given in Table 2, following are the number indicating ISO 9001 certification: Public Sector = 5, MFG = 89, Logis/Dist = 45, Pharma/Food = 11, Prof Serv = 8, Trade = 3. Given the small cell sizes, these were collapsed into four groups as: 1) Public Sector+ProfServ, 2) Logis/Dist+Trade, 3) Pharma/Food, and 4) MFG. ISO 9001 certification was analyzed by these four Industry Groups. Since the number of Employees in Purchasing was found to be related to ISO 9001 certification, we also included this as a control variable in the analysis. The model was found to be significant for Industry Class and Purchasing Employees. To determine which industries differed, an analysis of contrasts was performed and is given in Table 4.

The results of this analysis show that the Class of Public Sector and Professional Services is much less likely to be ISO 9001 certified than any of the other Classes. The Class of Pharmaceuticals and Food is about 3 times more likely to be certified as the Class that includes Logistics, Distribution and Trade (Wholesale & Retail). The Manufacturing Class is seven times more likely to be certified when compared to the Class of Pharmaceuticals and Food and six

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM times more likely to be certified when compared to the Class of Logistics, Distribution and Trade.

Table 4 Contrasts for ISO 9001 Certification versus Industry Class

Odds Variables/Contrasts Beta Wald Significance ratio Industry Class 51.73 0.000 PubSec+ProfServ vs. 1.12 6.46 0.011 3.06 Logis/Dist+Trade PubSec+ProfServ vs. Pharma/Food 1.78 10.40 0.001 5.96 PubSec+ProfServ vs. MFG 2.95 47.6 0.000 19.11 Logis/Dist+Trade vs. Pharma/Food 1.23 6.12 0.013 3.41 Logis/Dist+Trade vs. MFG 1.83 22.26 0.000 6.25 Pharma/Food vs. MFG 1.98 34.79 0 .000 7.26 Purchasing Employees 20.78 0.000

Research Question 3

Research question 3 seeks to determine how organizational position in the supply chain might be related to ISO 9001 certification. Respondents were asked to approximate their organization’s supply chain position from a group of seven choices involving a sequence of upstream, middle and downstream positions. These positions were defined as: raw material extraction, basic material manufacture, component manufacture, sub-assembly manufacture, final assembly manufacture, distribution/logistics, retail. The first three positions were collapsed into Basic Manufacturing, while the next two formed Assembly Manufacturing. The final two became the downstream Logistics/Retail position. The ISO 9001 question along with the supply chain position were then used in the assessment of the second research question.

Table 5 Contrasts for ISO 9001 Certification versus Supply Chain Position

Variables/Contrasts Beta Wald Significance Odds ratio Supply Chain Position 36.61 0.000 Basic MFG vs Assy MFG 0.26 0.39 0.534 1.30 Dist/Retail vs Basic MFG 1.62 14.70 0.000 5.03

Dist/Retail vs Assy MFG 1.88 0.000 6.54 33.44 Purchasing Employees 16.53 0.000

ISO 9001 certification was analyzed by Supply Chain Position and number of Purchasing Employees. The model was found to be significant for Supply Chain Position (Wald = 36.6, p = 0.000) and for Purchasing Employees. To determine which Supply Chain Positions differed, an analysis of contrasts was performed and is given in Table 5. There is no difference in the odds of Basic and Assembly Manufacturing to be ISO 9001 certified. However, both of these positions are much more likely to be ISO 9001 certified than the Distribution/Retail position. Basic 671885-8

Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM manufacturing is almost five times more likely and Assembly Manufacturing over six times more likely to be ISO 9001 certified as Distribution/Retail.

Research Question 4

Research question 4 seeks to determine how ISO 9001 adoption might be related to the level of organizational quality management practice. Study of the thirteen statements intended to measure OQS (Organizational Quality System) score revealed two constructs for quality under factor analysis. The factor analysis used principle components analysis with varimax rotation and was acceptable for the KMO measure of sampling adequacy (Index = 0.934) and the Bartlett’s test of sphericity (p = 0.000).

Table 6 Organizational Quality System (OQS) Constructs for Respondent Organization

Construct 1 Statements Construct 2 Statements (OQS-C1: Internal-Downstream Quality) (OQS-C2: External-Upstream Quality) Customer satisfaction/service data for key Suppliers are expected to show active use indicators are actively accumulated and analyzed. of a quality management and control system. Customer data are used to make internal quality Suppliers of critical goods and services are improvements. engaged in partnerships (i.e., joint improvement with open information exchange). Customer complaints are tracked and managed Outstanding suppliers are recognized through a formal complaint system with feedback. through a formal award program. Customer service standards are kept. Cost of Quality data is collected, analyzed and published. Employee use of quality-related problem solving Formal process benchmarking uses techniques is actively supported (e.g., DMAIC, company data to compare to competitors control charting, etc.) for process improvements. Quality metrics or standards are kept. Team-based quality improvement is actively supported. Top management has a demonstrated commitment to quality.

The factor analysis also met the requirement for minimum sample size according to Nunnally (1978) with at least 10 times the number of variables (i.e., N = 436 > 10*13=130). Reliability analysis of OQS Constructs 1 and 2 yielded Cronbach’s Alpha values of 0.927 and 0.829 respectively, thus meeting the requirements for reliability. The eight statements for OQS Construct 1 (OQS-C1) were associated with internal-to-firm and customer-related quality efforts; we refer to this construct as Internal-Downstream Quality. The quality scores for the eight statements in this construct were summed to a total possible score of 56. OQS Construct 2 statements (OQS-C2) were associated with supplier and competitor related quality efforts; we refer to this construct as External-Upstream Quality. The quality scores for the five statements in 671885-9

Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM this construct were summed to a total possible score of 35. The quality scores for all thirteen statements were summed for a possible total quality maturity score of 91. The statements that relate to the OQS, OQS-C1 and OQS-C2 are included in Table 6.

ISO 9001 certification was analyzed by the three quality constructs, number of employees in Purchasing, and respondent familiarity with the firm’s quality program. Significant in the final model were Quality Management Construct 1 (Beta = 0.68, Wald = 21.75, p=0.000) and Purchasing Employees (Wald = 12.6, p = 0.002). However, an odds ratio of 1.07 for the Quality Management measure indicates that ISO 9001 certified organizations are only marginally more likely to have more mature quality programs when compared to firms that are not ISO 9001 certified.

Research Question 5

Research question 5 examines the relationship between ISO 9001 adoption and supplier quality maturity. Recall that the quality score for each of the top three ranked suppliers is the sum of scores for five questions related to quality (i.e., the maximum supplier total quality score is 35). We refer to the quality scores for each rank group as: SQS-R1 for suppliers ranked number 1, SQS-R2 for those in the group ranked number 2, and SQS-R3 for those ranked number 3. A Cronbach’s alpha test of the five sub-statements revealed they are internally consistent (alphas of 0.837, 0.894, and 0.914) and therefore, reliable.

ISO 9001 certification capability was analyzed by each supplier group quality score, number of Purchasing Employees, and respondent familiarity with the firm’s quality program. As shown in Table 7, SQS-R1, SQS-R2, SQS-R3, and number of Purchasing Employees were significant in the final model. The analysis revealed that, in general, ISO 9001 certified firms choose suppliers that are slightly more mature (odds ratio about 1.1) when compared to firms that are not ISO 9001 certified. Table 7 ISO 9001 Certification by Supplier Quality Program Maturity Variable Beta Wald Significance Odds ratio SQS-R1 0.079 11.43 0.001 1.08 SQS-R2 0.057 5.38 0.020 1.06 SQS-R3 0.083 10.08 0.002 1.09 Purchasing Employees 8.10 0.017

Research Question 6 Research question 6 examines the relationship between ISO 9001 adoption and the selection of suppliers that are also ISO 9001 capable. Recall that the first of the five statements measuring supplier quality maturity asks about supplier ISO 9001 capability. This question, along with AIV and Employees in Purchasing, was analyzed. While supplier ISO 9001 capability was significant in the model, AIV and number of Employees in Purchasing were not. The results are given in Table 8. These indicate that ISO 9001 certified firms are about twice as likely (odds ratio about 1.8) to choose suppliers that are certified or capable of being certified than non-ISO 9001 organizations.

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Table 8 ISO 9001 Certification by Supplier Certification Capability

Variable Beta Wald Significance Odds ratio Supplier 1 - ISO 0.586 24.7 0.000 1.8 Supplier 2 – ISO 0.548 23.9 0.000 1.73 Supplier 3 - ISO 0.553 23.6 0.000 1.74

DISCUSSION, LIMITATIONS AND FURTHER STUDY

This study sought to explore ISO 9001 certification in relation to company size, industry class, supply chain position, quality practice, and supplier selection. However, just under half of the respondents volunteered information about their ISO 9001 certification status. Of those that did, only about 40% on average had ISO 9001 certification. This amounts to around 20% percent of the organizations that responded to the survey in general. So this study can report that between 20% and 40% of the companies surveyed are ISO 9001 certified. We found that company size is positively related to ISO 9001 certification. Larger companies are more likely to be certified than medium and small companies. ISO 9001 certification does vary also by industry class. Public Sector and Professional Services are much less likely to be ISO 9001 certified than any of the other classes. Pharmaceuticals and Food are more likely to be certified than Logistics, Distribution, Wholesale and Retail. Manufacturing is much more likely to be certified compared to Pharmaceuticals and Food as well as Logistics, Distribution, Wholesale and Retail.

When it came to supply chain position, differences were found. While there was no difference in the rate of certification between Basic and Assembly Manufacturing, both of these positions were much more likely to be ISO 9001 certified than the Distribution/Retail position. We found that ISO 9001 certified organizations are only marginally more likely to have more mature quality programs when compared to firms that are not ISO 9001 certified. ISO 9001 certified firms also choose suppliers that are slightly more quality mature when compared to firms that are not ISO 9001 certified. Finally, ISO 9001 certified firms are about twice as likely to choose suppliers that are certified or capable of being certified than non-ISO 9001 organizations.

Thus, it appears that ISO 9001certification is not uniformly distributed by firm size, industry class, or supply chain position. Further, there does not appear to be a strong relationship between quality maturity and ISO 9001 certification, either within the firm or in relation to supplier selection. However, ISO 9001 certified firms favor supplier firms that are also ISO 9001 capable. This may explain in part why ISO 9000 has not proliferated so rapidly in the USA. ISO 9000 firms in the USA do not have differing quality maturity than that of a typical firm. Therefore, there appears to be no incentive to become certified except to garner increased business from those firms that demand ISO 9000 certification.

This study does have limitations that should be noted. Not all industry groups or supply chain positions were well-represented. Even with category consolidation, a few of them suffered from small sub-group sizes. Although the response rate was good, the study could have benefitted from a larger sample of firms reporting ISO 9001 status. Also, since the supplier quality measure (i.e., SQS) was not identical to the organizational quality measure (i.e., OQS). any comparisons

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Dellana et al. AN EXPLORATION OF ISO 9001 AND SCM of customer self-evaluation of organizational quality to customer evaluation of supplier quality are not definitive, but provide an interesting contrast for issues of validity and reliability. Finally, since the respondents are at companies almost exclusively located in the United States, then this sample represents firms operating in the United States, both foreign and domestic. While we did not ask a question specific to national affiliation of the firm, we found that about a third of the companies in the study employ more than 5,000 employees and have procurement spend in excess of 100 million dollars annually. So, if company size and procurement spend are any indication of global reach, then we expect that global companies are represented in the sample.

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